After immigration, it’s London v the euro area

Jacques Lafitte and Denis MacShane

To read the press, 99% of the discussion over the deal that British Prime Minister David Cameron hopes will avoid Brexit has focused on supplements for low-pay European workers with children.But this focus on EU migrant workers has obscured a much bigger issue – particularly in France and maybe not just there. In Paris, the issue is not what the UK does on immigration, but rather London’s bid for oversight of the euro area’s development.As French pro-business commentator Nicolas Baverez of Le Point writes, ‘The UK did not want to join the euro and cannot now demand a droit de regard on the single currency. France should actively prepare for Brexit, shaping an attractive offer to the talent, firms and capital that will leave Britain to operate in the single market.’Latest opinion polls showing a trend towards Brexit are forcing French politicians and business leaders to begin drawing up contingency plans for a UK-less EU. Cameron’s claim that he has altered the terms of British membership so that they are ‘different to what other countries have’ has been duly noted.Most British politicians and pundits view the euro as a failure. But that is not the case across the Channel. The euro is now well into its second decade. No one on the continent wants to return to the old Europe of competing currencies. Reverting to Balkanised national currencies and other economic and populist nationalisms is viewed as a much greater threat than Brexit.For France in particular, the euro is the ‘Ark of the Covenant’ securing peace and partnership with Germany. No French politician can offer London concessions suggesting that it has the right to stop or even slow euro area decisions. President François Hollande’s opponents in the 2017 presidential election will be merciless if he makes any concessions appearing to privilege London over the euro area. In the eyes of virtually all French, the trade is all one way and l’Albion perfide is up to its old tricks.The EU will return to the unfinished business of the euro area soon after the UK referendum. As Baverez writes, ‘The EU must speed up the consolidation of the euro area, relaunch the single market in services, and invest massively in the security of its territory and its population.’This line was echoed yesterday by the governors of the German and French central banks, Jens Weidmann and François Villeroy de Galhau, in a joint article in Le Monde and Süddeutsche Zeitung. The two argued that the EU needed a finance ministry under political control and that ‘greater integration seems to be the obvious way to restore confidence in the euro area.’As the rest of Europe ponders Brexit, can the British come to terms with the euro’s existence? The currency is not going to go away and – Brexit or no Brexit – the euro area will not take much notice of what the UK says, however reasonable and justified London may believe it is.